U.S. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark One
x QUARTERLY REPORT PURSUANT TOUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2016September 30, 2017
o¨ TRANSITION REPORT PURSUANT TOUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ___________________
Commission File No. No. 000-55210
GREEN VISION BIOTECHNOLOGY CORP. | |
(Exact name of registrant as specified in its charter) |
Nevada | 7380 | 98-1060941 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Number) | (IRS Employer Identification Number) |
1255 W. Rio Salado ParkwayRooms 1505-06, The Center, 99 Queen’s Road Central,
Suite 215
Tempe, AZ 85281Hong Kong SAR, China
(Address and telephone number of principal executive offices)
Copies to:
VIBE WIRELESS CORPMatthew McMurdo, Esq.
McMurdo Law Group, LLC
1185 Avenue of the Americas
3rd Floor
New York, New York 10036
917-318-2885
(Former name, former address and former fiscal year, if changed since last report)
Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filed,filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| Accelerated filer | ¨ |
Non-accelerated filer |
| Smaller reporting company | x |
Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by checkmarkcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes xo No ox
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A
Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.
Yes x No o
Applicable Only to Corporate RegistrantsIssuers:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date: As of December 19, 2016,September 30, 2017, there were 60,790,000160,790,000 shares of Common Stock of the issuer outstanding.
2 |
ITEM 1.ITEM: 1 FINANCIAL STATEMENTS (UNAUDITED)STATEMENTS
GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
| Note |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
|
|
|
| (Unaudited) |
|
| (Audited) |
| |||
ASSETS |
|
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
|
|
|
| $ | 59,532 |
|
| $ | 518,849 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
|
|
| 443,356 |
|
|
| 791,800 |
|
Inventories, net |
| 6 |
|
|
| 273,991 |
|
|
| 231,976 |
|
Advance to suppliers |
|
|
|
|
| 46,327 |
|
|
| 53,220 |
|
Other receivables |
| 3 |
|
|
| 371,275 |
|
|
| 106,149 |
|
Amount due from related parties |
| 10 |
|
|
| - |
|
|
| 1,814,133 |
|
Total current assets |
|
|
|
|
| 1,194,481 |
|
|
| 3,516,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant equipment, net |
| 4 |
|
|
| 3,072,163 |
|
|
| 3,117,449 |
|
Intangible assets |
| 5 |
|
|
| 884,984 |
|
|
| 864,981 |
|
Long term lease prepayment |
|
|
|
|
| 20,005 |
|
|
| 20,005 |
|
Total non-current assets |
|
|
|
|
| 3,977,152 |
|
|
| 4,002,435 |
|
TOTAL ASSETS |
|
|
|
| $ | 5,171,633 |
|
| $ | 7,518,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
| $ | 126,971 |
|
| $ | 146,222 |
|
Advances from customer |
|
|
|
|
| 15 |
|
|
| 11,511 |
|
Accrued expenses |
|
|
|
|
| 89,597 |
|
|
| 100,883 |
|
Accrued payroll |
|
|
|
|
| 15,938 |
|
|
| 17,677 |
|
Other payables |
| 8 |
|
|
| 207,852 |
|
|
| 183,212 |
|
Other tax payables |
|
|
|
|
| 67 |
|
|
| 27,233 |
|
Amount due to related parties |
| 10 |
|
|
| 5,273,343 |
|
|
| 6,419,136 |
|
Amount due to shareholder |
|
|
|
|
| 3,916,473 |
|
|
| 3,943,856 |
|
Total current liabilities |
|
|
|
|
| 9,630,256 |
|
|
| 10,849,730 |
|
TOTAL LIABILITIES |
|
|
|
| $ | 9,630,256 |
|
| $ | 10,849,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value per share, authorized 750,000,000 and 750,000,000 shares, issued and outstanding 160,790,000 and 100,000,000 shares at June 30, 2017, and December 31, 2016 respectively |
|
|
|
|
| 160,790 |
|
|
| 100,000 |
|
Additional paid-in capital |
|
|
|
|
| (282,209 | ) |
|
| (57,120 | ) |
Accumulated other comprehensive loss |
|
|
|
|
| (85,504 | ) |
|
| (174,098 | ) |
Accumulated deficit |
|
|
|
|
| (4,251,700 | ) |
|
| (3,199,950 | ) |
TOTAL STOCKHOLDERS’ DEFICIT |
|
|
|
|
| (4,458,623 | ) |
|
| (3,331,168 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
| $ | 5,171,633 |
|
| $ | 7,518,562 |
|
See accompanying notes to unaudited consolidated financial statements
3 |
Table of Contents |
GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
| Note |
|
| Three Months Ended Sept 30, 2017 |
|
| Three Months Ended Sept 30, 2016 |
|
| Nine Months Ended Sept 30, 2017 |
|
| Nine Months Ended Sept 30, 2016 |
| ||||
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Revenue, net |
|
|
|
|
|
| 16,234 |
|
|
| 120,538 |
|
|
| 121,088 |
|
|
| 1,232,111 |
|
Cost of goods sold |
|
|
|
|
|
| 10,455 |
|
|
| 98,462 |
|
|
| 74,615 |
|
|
| 940,962 |
|
Gross profit |
|
|
|
|
|
| 5,779 |
|
|
| 22,076 |
|
|
| 46,473 |
|
|
| 291,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
|
|
|
| 38,405 |
|
|
| 14,437 |
|
|
| 51,615 |
|
|
| 64,248 |
|
General and administrative expenses |
|
|
|
|
|
| 568,964 |
|
|
| 214,650 |
|
|
| 1,041,981 |
|
|
| 777,447 |
|
Total operating expenses |
|
|
|
|
|
| 607,369 |
|
|
| 229,087 |
|
|
| 1,093,596 |
|
|
| 841,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
|
|
|
| (601,590 | ) |
|
| (207,011 | ) |
|
| (1,047,123 | ) |
|
| (550,546 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
| 117 |
|
|
| 63 |
|
|
| 117 |
|
|
| 63 |
|
Interest expenses |
|
|
|
|
|
| (612 | ) |
|
| (441 | ) |
|
| (2,481 | ) |
|
| (2,787 | ) |
Other income |
|
|
|
|
|
| (1,485 | ) |
|
| 75,986 |
|
|
| 1,265 |
|
|
| 77,999 |
|
Other expense |
|
|
|
|
|
| (108 | ) |
|
| 69 |
|
|
| (3,528 | ) |
|
| (13,467 | ) |
Total non-operating income(expense) |
|
|
|
|
|
| (2,088 | ) |
|
| 75,677 |
|
|
| (4,627 | ) |
|
| 61,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) before income taxes |
|
|
|
|
|
| (603,678 | ) |
|
| (131,334 | ) |
|
| (1,051,750 | ) |
|
| (488,738 | ) |
Income taxes |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Net loss |
|
|
|
|
|
| (603,678 | ) |
|
| (131,334 | ) |
|
| (1,051,750 | ) |
|
| (488,738 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
| (603,678 | ) |
|
| (131,334 | ) |
|
| (1,051,750 | ) |
|
| (488,738 | ) |
Foreign currency translation adjustment |
|
|
|
|
|
| 18,225 |
|
|
| (50,597 | ) |
|
| 88,594 |
|
|
| (94,767 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
| (585,453 | ) |
|
| (181,931 | ) |
|
| (963,156 | ) |
|
| (583,505 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share of common stock |
|
| 9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic |
|
|
|
|
|
| (0.38 | )cents |
|
| (0.13 | )cents |
|
| (0.80 | )cents |
|
| (0.49 | )cents |
-Diluted |
|
|
|
|
|
| (0.38 | )cents |
|
| (0.13 | )cents |
|
| (0.80 | )cents |
|
| (0.49 | )cents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common stock |
|
| 9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic |
|
|
|
|
|
| 160,790,000 |
|
|
| 100,000,000 |
|
|
| 131,619,707 |
|
|
| 100,000,000 |
|
-Diluted |
|
|
|
|
|
| 160,790,000 |
|
|
| 100,000,000 |
|
|
| 131,619,707 |
|
|
| 100,000,000 |
|
See accompanying notes to unaudited consolidated financial statements
4 |
Table of Contents |
GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY VIBE WIRELESS CORP.)BALANCE SHEETSCONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIT AND COMPREHENSIVE INCOME
(UNAUDITED)
October 31, 2016 January 31, 2016 ASSETS Current Assets Cash and cash equivalents Total current assets Total Assets LIABILITIES AND STOCKHOLDERS' DEFICIT Liabilities Current Liabilities Advances & Loans from Related Parties Accounts payable and accrued liabilities Total current liabilities Total Liabilities Stockholders' Deficit Common stock, par value $0.001; 750,000,000 shares authorized, 60,790,000 shares issued and outstanding Additional paid in capital ) ) Accumulated deficit Total Stockholders' Deficit Total Liabilities and Stockholders' Deficit $ - $ - - - $ - $ - $ 82,365 $ 34,764 7,218 2,271 89,583 37,035 89,583 37,035 60,790 60,790 (16,862 (16,862 (133,511 ) (80,963 ) (89,583 ) (37,035 ) $ - $ -
The accompanying notes are an integral part of these financial statements
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| ||||||
|
| Common stock |
|
| Additional |
|
| other |
|
|
|
|
| Total |
| |||||||||
|
| Shares |
|
|
|
| paid-in |
|
| comprehensive |
|
| Accumulated |
|
| stockholders' |
| |||||||
|
| outstanding |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| equity/(deficit) |
| ||||||
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Balance, Dec 31, 2015 |
|
| 100,000,000 |
|
|
| 100,000 |
|
|
| (57,120 | ) |
|
| (51,101 | ) |
|
| (2,150,053 | ) |
|
| (2,158,274 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,049,897 | ) |
|
| (1,049,897 | ) |
Foreign currency translation adjustment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (122,997 | ) |
|
| - |
|
|
| (122,997 | ) |
Balance, Dec 31, 2016 |
|
| 100,000,000 |
|
|
| 100,000 |
|
|
| (57,120 | ) |
|
| (174,098 | ) |
|
| (3,199,950 | ) |
|
| (3,331,168 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse merger recapitalization |
|
| 60,790,000 |
|
|
| 60,790 |
|
|
| (225,089 | ) |
|
|
|
|
|
|
|
|
|
| (164,299 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| (1,051,750 | ) |
|
| (1,051,750 | ) |
Foreign currency translation adjustment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 88,594 |
|
|
| - |
|
|
| 88,594 |
|
Balance, September 30, 2017 |
|
| 160,790,000 |
|
|
| 160,790 |
|
|
| (282,209 | ) |
|
| (85,504 | ) |
|
| (4,251,700 | ) |
|
| (4,458,623 | ) |
Table of Contents |
GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY VIBE WIRELESS CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED OCTOBER 31, 2016 AND 2015
(UNAUDITED)CASH FLOWS
|
| (Unaudited) |
| |||||
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Cash flows used in operating activities: |
|
|
|
|
|
| ||
Net (loss) income |
| $ | (1,051,750 | ) |
| $ | (488,738 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 179,474 |
|
|
| 190,408 |
|
Amortization of intangible assets |
|
| 17,922 |
|
|
| 18,685 |
|
Allowance for doubtful accounts |
|
| 345,596 |
|
|
| - |
|
Long term lease prepayment |
|
| 867 |
|
|
| 1,809 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 29,468 |
|
|
| (829,810 | ) |
Inventories |
|
| (31,035 | ) |
|
| 361,584 |
|
Advances to suppliers |
|
| 9,047 |
|
|
| (593 | ) |
Other receivables |
|
| (255,178 | ) |
|
| (856,595 | ) |
Amount due from related parties |
|
| 610,830 |
|
|
| (411,937 | ) |
Accounts payable |
|
| (25,162 | ) |
|
| 50,660 |
|
Advances from customer |
|
| (11,741 | ) |
|
| (81,963 | ) |
Other payables |
|
| 16,158 |
|
|
| (93,907 | ) |
Other tax payables |
|
| (27,747 | ) |
|
| 5,128 |
|
Accrued payroll |
|
| (2,466 | ) |
|
| (10,907 | ) |
Accrued expenses |
|
| (40,447 | ) |
|
| (3,171 | ) |
Amount due to related parties |
|
| (47,849 | ) |
|
| 1,421,499 |
|
Net cash provided by (used for) operating activities |
|
| (284,013 | ) |
|
| (727,848 | ) |
Cash flows used for investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
| (1,512 | ) |
|
| (1,450 | ) |
Net cash used for investing activities |
|
| (1,512 | ) |
|
| (1,450 | ) |
Cash flows provided by (used for) financing activities: |
|
|
|
|
|
|
|
|
Repayment for amount due to related parties |
|
| - |
|
|
| (41,037 | ) |
Amounts due to shareholder |
|
| (173,600 | ) |
|
| 558,643 |
|
Net cash provided by (used for) financing activities |
|
| (173,600 | ) |
|
| 517,606 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
| (459,125 | ) |
|
| (211,692 | ) |
Effect of foreign currency translation |
|
| (192 | ) |
|
| (1,269 | ) |
Cash – beginning of period |
|
| 518,849 |
|
|
| 469,556 |
|
Cash – end of period |
| $ | 59,532 |
|
| $ | 256,595 |
|
Non-cash financing activities |
|
|
|
|
|
|
|
|
Issuance of common stock |
| $ | 60,790 |
|
| $ | - |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | 2,481 |
|
| $ | 2,787 |
|
Income taxes |
| $ | - |
|
| $ | - |
|
Three Months Ended Nine Months Ended October 31, 2016 October 31, 2015 October 31, 2016 October 31, 2015 REVENUES OPERATING EXPENSES General and administrative expenses Total Operating Expenses LOSS BEFORE INCOME TAXES Income taxes NET LOSS NET LOSS PER SHARE: BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED See accompanying notes to unaudited consolidated financial statements$ - $ - $ - $ - 35,593 5,918 52,548 15,493 35,593 5,918 52,548 15,493 (35,593 ) (5,918 ) (52,548 ) (15,493 ) - - - - $ (35,593 ) $ (5,918 ) $ (52,548 ) $ (15,493 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) 60,790,000 60,790,000 60,790,000 60,790,000
The accompanying notes are an integral part of these financial statements
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY VIBE WIRELESS CORP.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED OCTOBER 31, 2016 AND 2015
(UNAUDITED)
Nine months ended October 31, Nine months ended October 31, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ Adjustments to reconcile net loss to net cash used in operating activities: Changes in assets and liabilities Accounts payable and accrued liabilities CASH FLOW USED IN OPERATING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Proceeds from related parties Advances from prior director CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET CHANGE IN CASH Cash, beginning of period Cash, end of period $ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ Income taxes paid $ NONCASH TRANSACTIONS: Advances forgiven by prior director $
2016$ (52,548 ) (15,493 ) 4,947 6,368 (47,601 ) (9,125 ) 47,601 8,600 - 350 47,601 8,950 - (175 ) - 175 $ - - $ - - $ - - $ - 17,348
The accompanying notes are an integral part of these financial statements
GREEN VISION BIOTECHNOLOGY CORP.
(FORMERLY VIBE WIRELESS CORP.)
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2016
(Unaudited)
NOTE 1 – 1. ORGANIZATION AND NATURE OF BUSINESS
Green Vision Biotechnology Corp. (formerly known as Vibe Wireless Corp., originally known as Any Translation Corp.), (the “Company”, “GVBT”), was incorporated under the laws of the State of Nevada on July 5, 2012. We were founded to be in the business of translation and interpretation. The Company undertook translation and interpretation projects for various fieldsOn November 12, 2015, we changed our name from business, economics,Any Translation Corp. to science issues. All operating projects were customer tailored with freelancers that operated in their mother-tongue. We are presently in the process of exploring other business opportunities. The Company adopted a business planVibe Wireless Corp. On September 30, 2016, we changed our name from Vibe Wireless Corp. to pursue business opportunities in the global telecommunications industry.Green Vision Biotechnology Corp.
On September 30, 2016, Vibe Wireless Corp. (the "Company")the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by increasing the Company’s authorized number of shares of common stock from 75 million to 750 million and increasing all of its issued and outstanding shares of common stock at a ratio of ten (10) shares for every one (1) share held. The Company’s Board of Directors approved this amendment on September 30, 2016.
On September 30, 2016, the This stock split has been retroactively applied. The Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, Green Vision Biotechnology Corp. pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company is the sole surviving entity and changed its name to “Green Vision Biotechnology Corp.”
The investment transaction under the share exchange agreements and contractual agreements as described below (collectively the “Transaction Agreements”) was entered into, between each of the Shareholders of Lutu International Biotechnology Limited (“Lutu International”), a company incorporated under the laws of Cayman Islands and GVBT (the “Investment Transaction”) on May 12, 2017. As a result of closing the Investment Transaction, GVBT acquired part of the shares of Lutu International and assumed management of Lutu International and all its direct and indirect subsidiaries (“the Lutu Group”).
On September 30, 2016, the Company filed an Issuer Company-Related Action Notification FormMay 12, 2017, GVBT entered into a share exchange agreement with FINRA requesting that the aforementioned forward split and name change be effectedHarcourt Capital Limited (“Harcourt”), a limited company incorporated in the market.British Virgin Islands, which holds 6% of the issued and outstanding shares of Lutu International; and Woodhead Investments Limited (“Woodhead”), a limited company incorporated in the British Virgin Islands, which holds 5% of the issued and outstanding shares of Lutu International (the “Minority Interest Exchange Agreement”). Under the Minority Interest Exchange Agreement, Woodhead agreed to transfer GVBT a total of 5% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Woodhead, or persons designated by Woodhead, a right to receive a total of 5 million shares of GVBT’s common stock. Under the Minority Interest Exchange Agreement, Harcourt agreed to transfer to GVBT a total of 6% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Harcourt, or persons designated by Harcourt, a right to receive a total of 6 million shares of GVBT’s common stock. The transactions under the Minority Interest Exchange Agreement were completed on May 12, 2017.
Able Lead has an outstanding loan of $4.43 million denominated in Renminbi (“RMB”) owed to an unrelated third party with its maturity date on January 22, 2018 (the “Outstanding Loan”). Shares of Lutu International held by Able Lead were offered by Able Lead as collateral to secure repayment of the Outstanding Loan.
On May 12, 2017, GVBT entered into a share exchange agreement (the “Majority Interest Exchange Agreement”) with Able Lead Holdings Limited (“Able Lead”), the 89% shareholder of Lutu International. Under the Majority Interest Exchange Agreement, Able Lead agreed to enter into a series of contractual arrangements with GVBT (collectively, the “Contractual Arrangements”) (as described below), in which GVBT assumed management control of the Lutu Group. Able Lead further agreed to deliver the shares of Lutu International to GVBT once the Outstanding Loan is fully repaid. In consideration, GVBT agreed to issue and deliver a total of 89 million shares of GVBT’s common stock to an escrow agent (issued in the name of the escrow agent or its nominee) (the “ Escrow Shares ”). The Escrow Shares shall be held in escrow for a period of one year or such period of time to be agreed by GVBT and Able Lead upon the execution of the Majority Interest Exchange Agreement. Conditional upon the full repayment of the Outstanding Loan and the release of the Security, the Escrow Shares shall be released to Able Lead in exchange for the delivery of a total of 89% of the issued and outstanding shares of Lutu International by Able Lead to GVBT. In the event that Able Lead fully repays the Outstanding Loan and causes the release of the Security, then the Escrow Shares shall be delivered to Able Lead. In the event that Able Lead cannot fully repay the Outstanding Loan (within a period of one year, or such period of time to be agreed by GVBT and Able Lead) and cause the release of the Security, then the Escrow Shares shall be delivered to transfer agent for cancellation. Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Majority Share Exchange Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements described as below. The transactions under the Majority Interest Exchange Agreement were completed on May 12, 2017.
Pursuant to an escrow agreement (the “Escrow Agreement”) entered into between Booth Udall Fuller, PLC (the “Escrow Agent”) and GVBT on May 12, 2017, the Escrow Shares shall be held by Booth Udall Fuller, PLC for a year upon the execution of the Majority Share Exchange Agreement. The Escrow Shares shall not be subject to any lien, attachment, or any other judicial process.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
On May 12, 2017, GVBT entered into a series of contractual agreements as described below with Lutu International Biotechnology Limited (“Lutu International”) and/or Able Lead (the “Contractual Arrangements”). Upon execution of the Contractual Arrangements, GVBT assumed management of Lutu International and its subsidiaries (the “Lutu Group”) and received economic benefits which includes right to receive the expected residual returns and and/or obligation to absorb expected loss from the Lutu Group. Each agreement in the Contractual Arrangements constitutes valid and binding obligations of the parties of such agreements and is enforceable and valid in accordance with the laws of Cayman Islands. All agreements executed by Lutu International were duly approved by its board of directors and the Shareholders of Lutu International.
Consulting Services Agreement
Pursuant to the exclusive consulting services agreement entered into between GVBT and Lutu International on May 12, 2017, GVBT has the exclusive right to provide to the Lutu Group general business operation services, including advice and strategic planning, as well as consulting services related to the technological research and development of bio-fertilizers. Further, GVBT owns the intellectual property rights developed or discovered through research and development, in the course of providing the consulting services, or derived from the provision of the consulting services. In consideration, Lutu International pays an annual consulting service fees to GVBT in the amount equivalent to all of Lutu International’s net profits for the relevant financial year. The term of this consulting service agreement is five (5) years from its effective date and may be terminated upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Consulting Services Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Operating Agreement
Pursuant to the operating agreement entered into between GVBT, Lutu International and Able Lead on May 12, 2017, GVBT agreed to provide guidance and instructions on the Lutu Group’s daily operations, financial management and employment issues. Able Lead agreed to designate candidates recommended by GVBT as their representatives on the boards of directors of each member of the Lutu Group. GVBT has the right to appoint senior executives of each member of the Lutu Group. In addition, GVBT agreed to guarantee the Lutu Group’s performance under any agreements or arrangements relating to the Lutu Group’s business arrangements with any third party. In consideration, Lutu International agrees that it will not, and will cause the Lutu Group not to, without the prior consent of GVBT, engage in any transactions that could materially affect their respective assets, liabilities, rights or operations, including but not limited to, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The term of this operating agreement is five (5) years from its effective date and may be extended and terminated only upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Operating Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Proxy Agreement
Pursuant to the proxy agreement entered into between Able Lead, Lutu International, and GVBT on May 12, 2017, Able Lead agreed to irrevocably grant a person to be designated by GVBT the right to exercise its voting rights and other rights, including the attendance of, and the voting at the shareholders’ meetings of Lutu International for and on behalf of Able Lead (or the signing of written resolutions in lieu of such meetings) in accordance with applicable laws and its articles of association, including but not limited to the appointment and voting for the directors and chairman of the board as the authorized representative of Able Lead to exercise controlling power in the Lutu Group. The proxy agreement may be terminated by joint consent of the parties or upon 7-day written notice from GVBT.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Changes Resulting from the Investment Transaction
The closing of the Investment Transaction occurred on May 12, 2017, resulting in a change of control of GVBT. Prior to closing of the Investment Transaction, GVBT had a total of 60,790,000 shares of common stock issued and outstanding. As a result of the closing of the Investment Transaction, GVBT now has a total of 160,790,000 shares of its common stock issued and outstanding, of which 60,790,000 shares, or approximately 37.8%, are owned by the previous existing shareholders of GVBT, with the balance of 100,000,000 shares, or approximately 62.2%, owned by the previous shareholders of Lutu International, with certain shares held in escrow.
Following the closing of the Investment Transaction, GVBT will carry on the business of the Lutu Group. The Lutu Group, with its operation primarily located in the Shanxi Province of China, is engaged in the biotechnology industry, in particular, the production and distribution of bio-fertilizers. Revenues of the Lutu Group are currently generated from China.
Changes to the Board of Directors and Officers
Simultaneous with the closing of the Investment Transaction, there was a change in the officers and directors of GVBT. As authorized by the bylaws, the existing director of GVBT, Mr. Ma Wai Kin, appointed two (2) additional members to the Board of GVBT. Such members are Mr. Lam Ching Wan (also known as William Lam) and Mr. Leung Kwong Tak (also known as Dr. Michael Leung). Mr. Ma also appointed Mr. William Lam as GVBT’s Chief Executive Officer and Mr. Lo Kwok Leung as GVBT’s Chief Financial Officer. Mr. Lo Kwok Leung is not related to Dr. Michael Leung.
All members of the Board shall hold their respective offices for a term of one year from their respective dates of appointment, or until the election and qualification of their successors, and thereafter to resign as a director of GVBT. In accordance with the bylaws, officers are elected by the board of directors and serve at the discretion of the board of directors.
Accounting Treatment
The Investment Transaction is being accounted for as a reverse-merger and recapitalization. For financial reporting purposes, Lutu International is the acquirer and GVBT is the acquired company. After completion of the transaction, the assets, liabilities, operations results and cash flow of GVBT that will be reflected in the historical consolidated financial statements prior to the Investment Transaction will be those of Lutu International and its subsidiaries and will be recorded at the historical cost basis of Lutu International and its subsidiaries. The Company also requestedchanged its fiscal year ended from January 31 to December 31.
Tax Treatment and SEC Filer Status: Small Business Issuer
The Investment Transaction is intended to constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization exemptions that its ticker symbolmay be changed to “GVBT”. Such notification form is being reviewedavailable under the Code. Immediately following the Investment Transaction, the filer status of GVBT will be a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, as promulgated by FINRA. This name change andSEC.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our ticker symbol change was acknowledged by FINRA and effectedlast fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
· | a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and | |
· | an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes- Oxley Act of 2002. |
We may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company, and if we do, the information that we provide to the stockholders may be different than you might get from other public companies in which you hold equity. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market on November 27, 2016.value of our ordinary shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. The JOBS Act permits an "emerging growth company" like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – 2. BASIS OF PRESENTATION AND GOING CONCERNSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTINGPRESENTATION
The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim consolidated financial reporting. Accordingly, these consolidated financial statements do not include all information and footnote disclosures required for an annual set of consolidated financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows as of October 31, 2016September 30, 2017 and for all interim periods presented herein have been reflected in these consolidated financial statements and the notes there to. Interim results for the three and nine months ended October 31, 2016September 30, 2017 are not necessarily indicative of the results to be expected for the fiscal year as a whole. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as included in the Form 10-K8-K and 8-K/A for the year ended JanuaryDecember 31, 2016.2016 filed with U.S. SEC on May 12, 2017 and August 3, 2017.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The historical presentation of the consolidated financial statements includes the financial statements of LUTU INTERNATIONAL BIOTECHNOLOGY LIMITED, and its wholly-owned subsidiaries (collectively referred to herein as the “Company”). All intercompany accounts, transactions, and profits have been eliminated upon consolidation.
The following table depicts the identity of the subsidiaries:
Name of Subsidiary | Place of Incorporation | Attributable Equity Interest % | Registered Capital | ||||
Lutu International Biotechnology Limited (RTO accounting acquirer) (1) | Cayman Islands | 100 | USD100 | ||||
Light Raise Limited (2) | BVI | 100 | USD 1 | ||||
Hong Kong Prolific Mineral Resources Holdings Limited (3) | HKD | 100 | HKD 2 | ||||
Shanxi Green Biotechnology Industry Company Limited (4) | PRC | 100 | RMB 100,000,000 | ||||
Shenzhen Qianhai Lutu Supply Chain Management Company Limited (5) | PRC | 100 | RMB 5,000,000 |
Note: | (1) | Wholly owned subsidiary of Green Vision Biotechnology Corp. |
(2) | Wholly owned subsidiary of Lutu International Biotechnology Limited | |
(3) | Wholly owned subsidiary of Light Raise Limited | |
(4) | Wholly owned subsidiary of Hong Kong Prolific Mineral Resources Holdings Limited | |
(5) | Wholly owned subsidiary of Shanxi Green Biotechnology Industry Company Limited |
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Significant estimates and judgments inherent in the preparation of these consolidated financial statements include, among other things, accounting for asset impairments, allowances for doubtful accounts, depreciation and amortization, the collection of revenues from the Agricultural Cooperative.
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GOING CONCERNGREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Economic and political risks
The Company’s operations are mainly conducted in the Hong Kong Special Administrative Region (“Hong Kong”) and the People’s Republic of China (“China”) (for the purpose of this Current Report on Form 10-Q, China does not include Hong Kong, Macau Special Administrative Region of the People's Republic of China and Taiwan (The Republic of China) and a large number of customers are located in northern China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in Hong Kong and China, and by the general state of the economy in Hong Kong and China.
The Company’s operations and customers in Hong Kong and China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong and China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Foreign Currency Translation
The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency, while its functional currency are Chinese Renminbi (RMB) and Hong Kong Dollar (HKD). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $ using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.
Below is a table with foreign exchange rates used for translation:
For the nine months and year ended, (Average Rate) |
| Sept 30, 2017 | Dec 31, 2016 | Sept 30, 2016 | ||||||||||||
Chinese Renminbi (RMB) | RMB |
|
| 6.80732 |
| RMB |
|
| 6.64330 |
|
| RMB |
|
| 6.58022 | |
United States dollar ($) |
|
| $ | 1.00000 |
|
|
| $ | 1.00000 |
|
|
|
| $ | 1.00000 | |
|
| |||||||||||||||
As of (Closing Rate) |
| Sept 30, 2017 | Dec 31, 2016 | Sept 30, 2016 | ||||||||||||
Chinese Renminbi (RMB) | RMB |
|
| 6.65490 | RMB | 6.95566 | RMB | 6.67022 | ||||||||
United States dollar ($) |
|
| $ | 1.00000 | $ | 1.00000 | $ | 1.00000 | ||||||||
|
| |||||||||||||||
For the nine months and year ended, (Average Rate) |
| Sept 30, 2017 | Dec 31, 2016 | Sept 30, 2016 | ||||||||||||
Hong Kong (HKD) | HKD |
|
| 7.78721 | HKD | 7.76224 | HKD | 7.76378 | ||||||||
United States dollar ($) |
|
| $ | 1.00000 | $ | 1.00000 | $ | 1.00000 | ||||||||
|
| |||||||||||||||
As of (Closing Rate) |
| Sept 30, 2017 | Dec 31, 2016 | Sept 30, 2016 | ||||||||||||
Hong Kong (HKD) | HKD |
|
| 7.81164 | HKD | 7.75652 | HKD | 7.75497 | ||||||||
United States dollar ($) |
|
| $ | 1.00000 | $ | 1.00000 | $ | 1.00000 |
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company earns revenue by selling merchandise to end using customers primarily through distribution agent and directly to customers.
Revenue is recognized when merchandise is purchased by and delivered to the customer and confirmed and collectability is reasonably assured. Revenue from wholesale agent is recognized after goods delivered, amount fixed or determined and collectability is reasonably assured.
All revenues are shown net of estimated returns during the relevant period represented by estimated allowance for sales returns based upon historical experience.
The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.
During the three and nine months ended September 30, 2017 and 2016, the provision of sales return were $ Nil respectively.
Cost of Goods Sold
Cost of goods sold includes the cost of materials, labor, and relevant manufacturing expenses.
Selling Expenses
Selling expenses include packaging and shipping costs, as well as advertising and certain expenses associated with operating the Company’s corporate headquarters.
Advertising Costs
The Company expensed all advertising costs as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $8,053 and $471 for the nine months ended September 30, 2017 and 2016 respectively and $1,563 and $Nil for the three months ended September 30, 2017 and 2016 respectively. Advertising expense is included in selling expense and general and administrative expenses in the accompanying consolidated statements of income.
Leases
The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company’s operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for office remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.
The Company did not have a lease that met the criteria of a capital lease. Leases that do not qualify as a capital lease are classified as an operating lease. Operating lease rental expenses included in selling, general and administrative expenses for the nine months ended September 30, 2017 and 2016 were $18,349 and $16,315 respectively and for the three months ended September 30, 2017 and 2016 were $8,487 and $5,447.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable
Accounts receivable is recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is maintained for all customers based on a variety of factors, including the industry practice, the length of time the receivables are past due, significant one-time events and historical experience. The Company is selling products delivered to certain customers which are closed to Agriculture Cooperatives as defined by ASC 905 “Agriculture”. The collection cycle may be varied and depended on the growing crops cycle.
Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectability of outstanding accounts receivable. The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance. Bad debts are written off as incurred. During the quarter ended September 30, 2017 and year ended December 31, 2016, the bad debts incurred were $Nil and $Nil respectively.
Outstanding accounts balances are reviewed individually for collectability. The Company does not charge any interest income on trade receivables. Accounts balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To date, the Company has not charged off any balances as it has yet to exhaust all means of collection.
During the quarter ended September 30, 2017 and year ended December 31, 2016, the provision of doubtful debts were $345,596 and $Nil respectively.
Inventories
Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.
Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.
Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.
These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is provided over the estimated useful lives, using the straight-line method with 5% scrape value as follows:
Buildings | 20 years | |
Machinery & equipment | 10 years | |
Office equipment | 3 years | |
Motor vehicles | 4 years |
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Land Use Rights
According to the laws of the PRC, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years.
Goodwill
Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles — Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.
The Company performed an annual impairment test as of the end of fiscal year 2016, and determined that an impairment loss in the amount of $nil were recorded in 2016.
Long-lived Assets
The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.
The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions.
During the reporting periods, the Company performed the evaluation and there was no impairment loss.
Cash and Concentration of Credit Risk
The Company maintains cash in bank deposit accounts in Hong Kong and PRC, and considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company performs ongoing evaluations of the institution to limit its concentration risk exposure.
The Company’s customers are mainly located in the northeastern China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Retirement Benefit Plans
Full time employees of the Company in China participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation—Retirement Benefits.
The total amounts for such employee benefits which were expensed were $7,060 and $9,981 for the nine months ended September 30, 2017 and 2016 and $3,339 and $4,023 respectively and for the three months ended September 30, 2017 and 2016 respectively.
Income Taxes
The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.
Comprehensive income
Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other consolidated financial statements. The Company’s current component of comprehensive income is the net income and foreign currency translation adjustment.
Segment Reporting
The Company operates in one industry segment, operating manufacturing and selling of organic bio-fertilizer. ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.
Basic and diluted earnings (loss) per share
In accordance with ASC No. 260 “Earnings Per Share”, the basic earnings (loss) per common share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share is computed similarly to basic earnings (loss) per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance
FASB Clarifies the Definition of a Business. The FASB has issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business.
The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. They also provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable.
For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other companies and organizations, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
The FASB has issued Accounting Standards Update No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. The amendments relate primarily to the reporting by an employee benefit plan (a plan) for its interest in a master trust. A master trust is a trust for which a regulated financial institution (bank, trust company, or similar financial institution that is regulated, supervised, and subject to periodic examination by a state or federal agency) serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.
The amendments are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented. The amendments apply to reporting entities within the scope of Topic 960, Plan Accounting - Defined Benefit Pension Plans, Topic 962, Plan Accounting - Defined Contribution Pension Plans, or Topic 965, Plan Accounting - Health and Welfare Benefit Plans.
Under Topic 960, investments in master trusts are presented in a single line item in the statement of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in practice. For each master trust in which a plan holds an interest, the amendments require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively.
Topics 960 and 962 require plans to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by general type, within the plan’s financial statements. The amendments remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments.
Current U.S. GAAP does not require disclosure by plans of the master trust’s other assets and liabilities. Examples of those balances include amounts due from brokers for securities sold, amounts due to brokers for securities purchased, accrued interest and dividends, and accrued expenses. The amendments require all plans to disclose: (a) their master trust’s other asset and liability balances; and (b) the dollar amount of the plan’s interest in each of those balances.
Lastly, investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets are generally provided in both the defined benefit pension plan financial statements and the health and welfare benefit plan financial statements. Stakeholders noted that the disclosures are redundant. The amendments remove that redundancy and do not require that the investment disclosures relating to the 401(h) account assets be provided in the health and welfare benefit plan’s financial statements. The amendments will require the health and welfare benefit plan to disclose the name of the defined benefit pension plan in which those investment disclosures are provided, so that participants can easily access those statements for information about the 401(h) account assets, if needed.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance (continued)
The FASB has issued Accounting Standards Update (ASU) No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments apply to all employers, including not-for-profit entities, that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation — Retirement Benefits.
The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.
The amendments also allow only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset).
The amendments are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.
The FASB has issued Accounting Standards Update (ASU) No. 2017-09, Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting. ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award.
The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to the modification of the terms and conditions of a share-based payment award.
Diversity in practice has arisen in part because some entities apply modification accounting under Topic 718 for modifications to terms and conditions that they consider substantive, but do not when they conclude that particular modifications are not substantive. Others apply modification accounting for any change to an award, except for changes that they consider purely administrative in nature. Still others apply modification accounting when a change to an award changes the fair value, the vesting, or the classification of the award. In practice, it appears that the evaluation of a change in fair value, vesting, or classification may be used to evaluate whether a change is substantive.
Although the Master Glossary of the FASB Accounting Standards Codification™ currently defines the term modification as “a change in any of the terms or conditions of a share-based payment award,” Topic 718 does not contain guidance on what changes are substantive or purely administrative.
The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance (continued)
These amendments require the entity to account for the effects of a modification unless all of the following conditions are met:
· | The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; | |
· | The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and | |
· | The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. |
The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017.
Early adoption is permitted, including adoption in any interim period for: (a) public business entities for reporting periods for which financial statements have not yet been preparedissued, and (b) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an award modified on or after the adoption date.
The FASB has issued Accounting Standards Update (ASU) No. 2017-13.This ASU adds, amends, and supersedes SEC paragraphs of the Accounting Standards Codification (ASC) related to the adoption and transition provisions of ASU No. 2014-09, Revenue From Contracts with Customers and ASU 2016-02, Leases, for public business entities. The ASU is titled ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.
ASU 2017-13 codifies portions of an SEC Staff Announcement made at the July 20, 2017 Emerging Issues Task Force (EITF) meeting essentially delaying the effective date of the revenue recognition and leases standards for a going concern basissubset of public entities . The SEC Observer made the following SEC Staff Announcement, “Transition Related to Accounting Standards Updates No. 2014-09 and 2016-02,” at the July 20, 2017 EITF meeting:
The SEC staff would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC adopting (1) ASC Topic 606, Revenue from Contracts with Customers for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and (2) ASC Topic 842, Leases for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
A public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC may still elect to adopt ASC Topic 606 and ASC Topic 842 according to the public business entity effective dates.
This announcement is applicable only to public business entities that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC. This announcement is not applicable to other public business entities.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. OTHER RECEIVABLES
Other receivables consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Deposits |
| $ | 334,909 |
|
| $ | 101,124 |
|
Prepaid expenses |
|
| 2,980 |
|
|
| 3,992 |
|
Advance to employee |
|
| 33,386 |
|
|
| 1,033 |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 371,275 |
|
| $ | 106,149 |
|
NOTE 4. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Buildings |
| $ | 3,005,122 |
|
| $ | 2,877,610 |
|
Machinery & equipment |
|
| 570,052 |
|
|
| 545,864 |
|
Office equipment |
|
| 68,147 |
|
|
| 65,175 |
|
Motor vehicles |
|
| 149,622 |
|
|
| 143,273 |
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment |
|
| 3,792,943 |
|
|
| 3,631,922 |
|
Less: accumulated depreciation and impairment charges |
|
| (720,780 | ) |
|
| (514,473 | ) |
|
|
|
|
|
|
|
|
|
Total property, plant and equipment, net |
| $ | 3,072,163 |
|
| $ | 3,117,449 |
|
The depreciation expenses for the nine months ended September 30, 2017 and 2016 were $179,474 and $190,408 respectively.
The depreciation expenses for the three months ended September 30, 2017 and 2016 were $60,207 and $61,065 respectively.
NOTE 5. INTANGIBLE ASSETS
Intangible assets consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Land use rights |
| $ | 1,209,545 |
|
| $ | 1,158,222 |
|
Software system |
|
| 1,319 |
|
|
| 1,263 |
|
Less – accumulated amortization |
|
| (325,880 | ) |
|
| (294,504 | ) |
|
|
|
|
|
|
|
|
|
Total intangible assets, net |
| $ | 884,984 |
|
| $ | 864,981 |
|
The amortization expenses of land use rights and software systems for the nine months ended September 30, 2017 and 2016 were $17,922 and $18,685 respectively.
The amortization expenses of land use rights and software systems for the three months ended September 30, 2017 and 2016 were $6,009 and $6,146 respectively.
Future amortization of land use rights and software systems is as follows:
Years ending December 31, |
| Amount |
| |
2017 |
| $ | 6,048 |
|
2018 |
|
| 24,191 |
|
2019 |
|
| 24,191 |
|
2020 |
|
| 24,191 |
|
2021 |
|
| 24,191 |
|
Thereafter |
|
| 782,172 |
|
|
|
|
|
|
Total |
| $ | 884,984 |
|
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INVENTORIES
Inventories consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Raw material |
| $ | 100,616 |
|
| $ | 87,862 |
|
Finished goods |
|
| 173,375 |
|
|
| 144,114 |
|
|
|
|
|
|
|
|
|
|
Inventories, net |
| $ | 273,991 |
|
| $ | 231,976 |
|
NOTE 7. CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
Sales:
Customer |
| As at Sept 30, 2017 |
| As at December 31, 2016 |
| |||||||||||
A |
| $ | 32,797 |
| 27 | % |
| $ | 820,900 |
| 64 | % | ||||
B |
| 26,451 |
| 22 | % |
| 74,128 |
| 6 | % | ||||||
C |
| 16,605 |
| 14 | % |
| 70,875 |
| 6 | % | ||||||
D |
| 14,812 |
| 12 | % |
| - |
| - | % | ||||||
E |
| 13,225 |
| 11 | % |
| - |
| - | % | ||||||
Total |
| $ | 103,890 |
| 75 | % |
| $ | 965,903 |
| 76 | % |
Purchases:
Supplier |
| As at Sept 30, 2017 |
| As at December 31, 2016 |
| |||||||||||
AA |
| $ | 32,493 |
| 26 | % |
| $ | 232,614 |
| 56 | % | ||||
BB |
| 21,472 |
| 17 | % |
| 83,988 |
| 20 | % | ||||||
CC |
| 18,032 |
| 14 | % |
| 32,403 |
| 8 | % | ||||||
DD |
| 13,555 |
| 11 | % |
| 16,921 |
| 4 | % | ||||||
EE |
| 8,924 |
| 7 | % |
| 11,628 |
| 3 | % | ||||||
Total |
| $ | 94,476 |
| 75 | % |
| $ | 377,554 |
| 91 | % |
NOTE 8. OTHER PAYABLES
Other payables consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Payables to employees |
| $ | 178,476 |
|
| $ | 162,153 |
|
Miscellaneous |
|
| 29,376 |
|
|
| 21,059 |
|
|
|
|
|
|
|
|
|
|
Total other payables |
| $ | 207,852 |
|
| $ | 183,212 |
|
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. LOSS PER SHARE
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which assumesrequires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants and stock options outstanding (using the treasury method). The following table sets forth the computation of basic and diluted net income per common share:
The following table sets forth the computation of basic and diluted net income per common share:
Period ended September 30, |
| Sept 30, 2017 |
|
| Sept 30, 2016 |
| ||
|
| (unaudited) |
|
| (unaudited) |
| ||
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share |
| $ | (1.051,750 | ) |
| $ | (488,738 | ) |
Weighted-average shares of common stock outstanding in computing net loss per common stock |
|
|
|
|
|
|
| |
Basic |
|
| 131,619,707 |
|
|
| 100,000,000 |
|
Diluted |
|
| 131,619,707 |
|
|
| 100,000,000 |
|
Basic loss per share of common stock |
|
| (0.80 | )cents |
|
| (0.49 | )cents |
Diluted loss per share |
|
| (0.80 | )cents |
|
| (0.49 | )cents |
NOTE 10. AMOUNT DUE FROM / TO RELATED PARTIES
The details for amount due from / to related parties were as follows:
Amount as at |
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Amount due from related parties: |
|
|
|
|
|
| ||
Well Supreme Limited (c) |
| $ | - |
|
| $ | 207,825 |
|
China Mineral Resources Holdings Limited (a) (c) |
|
| - |
|
|
| 9,141 |
|
Shanxi Lukun Mining Technology Co., Ltd (a) |
|
| - |
|
|
| 1,119,750 |
|
Isparta Holdings Limited (a) (b) (c) |
|
| - |
|
|
| 477,417 |
|
|
| $ | - |
|
| $ | 1,814,133 |
|
|
|
|
|
|
|
|
|
|
Amount as at |
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Amount due to related parties: |
|
|
|
|
|
|
|
|
Shanxi Chengkai Mining Technology Co., Ltd (a) |
| $ | - |
|
| $ | 1,234,520 |
|
Hong Kong Prolific Mineral Technologies Ltd (a) |
|
| - |
|
|
| 1,518,078 |
|
Pilot Sunshine Limited (a) (c) |
|
| - |
|
|
| 5,157 |
|
Able High Holdings Limited (a) (b) (c) |
|
| - |
|
|
| 2,780,449 |
|
Hong Kong Prolific Eco-Technology Limited (a) |
|
| - |
|
|
| 55,398 |
|
Holmsun Capital Limited (a) (b) |
|
| 5,273,343 |
|
|
| 393,150 |
|
Hui & Lam Solicitors LLP (c) |
|
| - |
|
|
| 21,380 |
|
Maycrown Capital Limited (a) (b) |
|
| - |
|
|
| 399,401 |
|
View Strong Limited (a) (b) (c) |
|
| - |
|
|
| 11,603 |
|
|
| $ | 5,273,343 |
|
| $ | 6,419,136 |
|
_______________
(a) | Common director, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited |
(b) | Common shareholder, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited |
(c) | Common director LAM Ching Wan of the Company |
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. INCOME TAXES
The Company and its subsidiaries have no operation in United States, Cayman Islands and British Virgin Islands, and are not subject to any domestic income tax. Therefore, no domestic income tax of United States, Cayman Islands and British Virgin Islands are paid in the quarter ended September 30, 2017 and year ended December 31, 2016.
Hong Kong Prolific Mineral Resources Holdings Limited was incorporated in Hong Kong and is subjected to Hong Kong profits tax rate of 16.5% for the nine and three months ended September 30, 2017 and 2016. Income tax (reversal) expense amounted to $Nil for the quarter ended September 30, 2017 and year ended December 31, 2016.
A reconciliation of the provision for income taxes with amounts determined by applying the Hong Kong profit rate of 16.5% to income before income taxes is as follows:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Profit (Loss) before income tax |
| $ | (232,076 | ) |
| $ | (453,066 | ) |
Temporary Difference |
|
| - |
|
|
| - |
|
Permanent Difference |
|
| - |
|
|
| - |
|
Taxable loss |
| $ | (232,076 | ) |
| $ | (453,066 | ) |
Hong Kong ProfitsTaxrate |
|
| 16.5 | % |
|
| 16.5 | % |
Current tax credit |
| $ | 38,293 |
|
| $ | 74,756 |
|
Less: Valuation allowance |
|
| (38,293 | ) |
|
| (74,756 | ) |
|
| $ | - |
|
| $ | - |
|
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended September 30, 2017 and year ended December 31, 2016.
Shanxi Green Biotechnology Industry Company Limited and Shenzhen Qianhai Lutu Supply Chain Management Company Limited were incorporated in the PRC and are subjected to income taxes under the current laws of the PRC. The EIT rate of PRC was 25% for the quarter ended September 30, 2017 and year ended December 31, 2016.
Profit (loss) before income tax of $(819,674) and $(484,914) for the quarter ended September 30, 2017 and year ended December 31, 2016 respectively, were attributed to operations in China. The income tax expenses consisted of the following:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Profit (Loss) before income tax |
| $ | (819,674 | ) |
| $ | (484,914 | ) |
Temporary Difference |
|
| - |
|
|
| - |
|
Permanent Difference |
|
| - |
|
|
| - |
|
Taxable loss |
| $ | (819,674 | ) |
| $ | (484,914 | ) |
China Enterprise Income Tax rate |
|
| 25 | % |
|
| 25.0 | % |
Current tax credit |
| $ | 204,919 |
|
| $ | 121,229 |
|
Less: Valuation allowance |
|
| (204,919 | ) |
|
| (121,229 | ) |
|
| $ | - |
|
| $ | - |
|
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended September 30, 2017 and year ended December 31, 2016.
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GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. SEGMENT INFORMATION
FASB Accounting Standard Codification Topic 280 (ASC 280) “Segment Reporting” establishes standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.
In the quarter ended September 30, 2017 and year ended December 31, 2016, the Company will be able to realize its assets and discharge its liabilitiesis regarded as a single operating segment, being engaged in the normal coursemanufacturing of business forbio-fertilizer. This principal activity and geographical market are substantially based in China, accordingly, no operating or geographical segment information are presented.
NOTE 13. COMPREHENSIVE INCOME
Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the foreseeable future. Theconsolidated statements of income and are recorded directly into a separate section of shareholders’ equity on the consolidated balance sheets. Comprehensive income and its components consist of the following:
Period and Year Ended |
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Net loss |
| $ | (1,051,750 | ) |
| $ | (1,049,897 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| 88,594 |
|
|
| (122,997 | ) |
|
|
|
|
|
|
|
|
|
Comprehensive loss |
| $ | (963,156 | ) |
| $ | (1,172,894 | ) |
NOTE 14. COMMITMENTS AND CONTINGENCIES
Operating Leases
Certain of our real properties are operated under lease agreements. Rental expense under operating leases was as follows:
|
| Sept 30, 2017 |
|
| December 31, 2016 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Rent expense |
| $ | 18,349 |
|
| $ | 17,890 |
|
|
|
|
|
|
|
|
|
|
Total rent expense, net |
| $ | 18,349 |
|
| $ | 17,890 |
|
Annual minimum payments under operating leases are as follows:
Years Ended December 31, |
| Minimum Lease Payment |
| |
|
|
|
| |
2017 |
| $ | 4,364 |
|
2018 |
|
| 17,457 |
|
2019 |
|
| 9,456 |
|
|
|
|
|
|
Total |
| $ | 31,277 |
|
23 |
Table of Contents |
GREEN VISION BIOTECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. GOING CONCERN
As of September 30, 2017 and December 31, 2016, the Company has incurred losses resulting in an accumulated deficit of $133,511 as$4,251,700 and $3,199,950 respectively, and its current liabilities exceed its current assets resulting in negative working capital of October 31, 2016.$8,435,775 and further losses are anticipated$7,333,603 respectively. In view of the matters described above, recoverability of a major portion of the recorded asset amounts and realization of the portion of current liabilities into revenue shown in the developmentaccompanying balance sheets are dependent upon continued operations of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern isCompany, which in turn are dependent upon the Company's ability to raise additional financing and to succeed in its future operations. The Company generating profitable operationsmay need additional cash resources to operate during the upcoming 12 months, and the continuation of the Company may be dependent upon the continuing financial support of investors and/or stockholders of the Company. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the future and, or, to obtaineventual profitability of the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and, or, private placement of common stock.Company. These financialsfinancial statements do not include any adjustments relating to the recoverability and reclassificationclassification of recorded asset amounts or amounts and classificationsclassification of liabilities that might result from this uncertainty.be necessary should the Company be unable to continue as a going concern.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESManagement has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing (i) additional funding which would enhance capital employed; and (ii) strategic partners which would increase revenue bases or reduce operation expenses. Management believes that the above actions will allow the Company to continue its operations throughout this fiscal year.
Recent Accounting PronouncementsNOTE 16. SUBSEQUENT EVENT
Subsequent to the period ended on September 30, 2017, Yao Gui Mu (“the Plaintiff”), former operation manager of Shanxi Green Biotechnology Industry Company (“the Defendant”) Limited, brought a lawsuit against the Company in the The Company does not expectDistrict People’s Court of Jin Zhong City, Yu Ci District on November 20, 2017. The subject dispute of the adoptionlawsuit concerns an unsettled current account balance of recently issued accounting pronouncements$135,239 (RMB900,000) which was claimed to havebe a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 3 – RELATED PARTY TRANSACTIONS
On August 28, 2015, the Company’s officer and director entered into an agreement to loan up to $50,000advanced to the Company accruing interest at 8%, dueby the Plaintiff. The Company’s PRC lawyer had prepared the Statement of Defense on September 1, 2016,November 23, 2017 and unsecured.submitted to The maturity date hasDistrict People’s Court of Jin Zhong City, Yu Ci District for defense. A court hearing was held on December 5, 2017, and pursuant to the latest opinion from the Company’s PRC lawyer, no provisions have been extendedmade for any probable and material loss as a result of the lawsuit. The final judgment of the lawsuit will be handed down within three months’ time by agreement to January 30, 2017. As of October 31, 2016 the Company has received $47,115 in loan proceeds under this agreement, including $12,351 loaned during the nine months ended October 31, 2016. The Company has accrued interest of $3,615 under the agreement as of October 31, 2016.early February 2018.
BeginningManagement has evaluated all activities and concluded that there was no other subsequent events have occurred that would require recognition in September 2016,the consolidated financial statements or disclosure in conjunction with a statutory merger with its wholly-owned subsidiary, Green Vision Biotechnology Corp, certain shareholders of Green Vision agreedthe notes to loan the Company funds on an on-going basis to be used for working capital accruing interest at 8%, due on January 31, 2018. The Company has received $35,250 in loans as of October 31, 2016 and accrued interest of $1,058.
The balance due to advances and loans from related parties was $82,365 and $34,764 as of October 31, 2016 and January 31, 2016 respectively.
consolidated financial statements.
Table of Contents |
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements". These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
Green Vision Biotechnology Corp. (the “Company”), formerly known as Vibe Wireless Corp., formerly known as Any Translation Corp., was incorporated under the laws of the State of Nevada on July 5, 2012. We were founded to be in the business of translation and interpretation. The Company undertook translation and interpretation projects for various fields from business, economics, to science issues. The Company later adopted a business plan to pursue business opportunities in the global telecommunications industry.
On September 2, 2015, a change in control of the Company took place by virtue of the Company's largest shareholder and sole officer and director at that time, selling 4,000,000 shares of the Company's common stock to Forestbay Capital Partners II, LLC, a Delaware limited liability company. Such shares represented 65.8% of the Company's total issued and outstanding shares of common stock. As part of the sale of the shares, Forestbay Capital Partners arranged with the former officer and director, prior to his resignation as the sole officer and director of the Company Board, to appoint Mr. Edward Mooney as the sole officer and director of the Company. Mr. Mooney is the Manager of Forestbay Capital Partners II, LLC.
On November 12, 2015, we changed our name to Vibe Wireless Corp in connection with merging with our wholly-owned subsidiary and adopted a business plan to pursue business opportunities in the global telecommunications industry.subsidiary. This name change and our ticker symbol change was acknowledged by FINRA and effected in the market on November 23, 2015.
The Company was originally incorporated under the laws of the State of Nevada on July 5, 2012 as Any Translation Corp.
On September 30, 2016, Vibe Wireless Corp. (the "Company")the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by increasing the Company’s authorized number of shares of common stock from 75 million to 750 million and increasing all of its issued and outstanding shares of common stock at a ratio of ten (10) shares for every one (1) share held. The Company’s Board of Directors approved this amendment on September 30, 2016.
On September 30, 2016, the Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, Green Vision Biotechnology Corp. pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company is the surviving entity and changed its name to “Green Vision Biotechnology Corp.”
On September 30, 2016, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned forward split and name change be effected in the market. The Company also requested that its ticker symbol be changed to “GVBT”. Such notification form is being reviewed by FINRA. This name change and our ticker symbol change was acknowledged by FINRA and effected in the market on November 27, 2016.
As disclosed in our Current Report on Form 8-K dated May 12, 2017 there has been a change in our management.
25 |
Table of Contents |
Results of Operations
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue inour operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Our revenue was $16,234 for the three months ended September 30, 2017 (“Q3”), a decrease of 86.5% from $120,538 for the three months ended September 30, 2016 (“Comparable Quarter”). Revenue was $121,088 for the nine months period ended September 30, 2017 (“Nine Months of FY2017”), a decrease of 90.17% from $1,232,111 for the nine months ended September 30, 2016 (“Comparable Period”). Our net loss for the Q3, Comparable Quarter, the Nine Months of FY2017, and Comparable Period, were $(603,678) $(131,334), $(1,051,750) and $(488,738), respectively. Our comprehensive loss for the Q3, Comparable Quarter, the Nine Months of FY2017, and Comparable Period were $(585,453), $(181,931), $(963,156) and $(583,505), respectively. Through September 30, 2017, our accumulated deficit and cumulative comprehensive loss were $(4,251,700) and $(85,504). Through December 31, 2016, our accumulated deficit and cumulative comprehensive loss were $(3,199,950) and $(174,098), respectively.
Result of Operations for the Three months ended September 30, 2017 and 2016
Revenue was decreased by $104,304, or 86.5% from $120,538 in the Comparable Quarter to $16,234 in Q3. The decrease in revenue during Q3 as compared to the Comparable Quarter was the result of the Company’s key customer has not placed an order for 2017. Moreover, this customer has not fully settled outstanding invoices for prior sales and the Company has decided to stop selling products to this customer on credit. Moreover, the Company is in the process to take appropriate legal actions for the recovery of account receivable in the nearest future. In order to diversify the Company’s operating risk, we have commenced conducting various field trials in order to promote and increase the sales of our products in major rice producing provinces in China, including Guangxi, Heilongjiang, and Jiangxi.
Cost of sales was decreased by $88,007, or 89.4% from $98,462 in the Comparable Quarter to $10,455 in Q3. The decrease was due to the decrease in production corresponding to the decrease in the sales revenue. In terms of percentage of revenue, cost of sales was 64.4% in Q3 as compared to 81.7% in the Comparable Quarter. The decrease was due to the significant decrease in certain variable costs as the production level dropped.
Gross profit was decreased by $16,297, or 73.8% from $22,076 in the Comparable Quarter to $5,779 in Q3. The decrease reflected the correlation in reduction of revenue. In terms of percentage of revenue, the gross profit percentage was increased to 35.6% for Q3 as compared to 18.3% for the Comparable Quarter. The decrease of gross profit was primarily due to the significant drop in the sales revenue.
Selling expenses were increased by $23,968, or 166.0% from $14,437 for the Comparable Quarter to $38,405 in Q3. In terms of percentage of revenue, the rates were 236.6% in Q3 compared to 12.0% in the Comparable Quarter. The increase was the result of more spending on promotion campaigns for stimulation on future sales against the continuous decline in sales revenue.
General and administrative expenses were increased by $354,314, or 165.1% from $214,650 for the Comparable Quarter to $568,964 for Q3. The increase is primarily due to the provision of doubtful debts of $345,596 in Q3. Excluding this factor, there was a slightly increase of $8,718, or 4.1%, compared to the Comparable Quarter.
The following is a summary of general and administrative expenses for the three months ended September 30, 2017, and 2016.
|
| Sept 30, 2017 |
|
| Sept 30, 2016 |
|
| Difference |
| |||
|
| Unaudited |
|
| Unaudited |
|
|
| ||||
Consulting fees |
| $ | 30,801 |
|
| $ | 44,505 |
|
| $ | (13,704 | ) |
Salary and payroll expenses |
|
| 56,887 |
|
|
| 48,680 |
|
|
| 8,207 |
|
Professional fees |
|
| 14,313 |
|
|
| 754 |
|
|
| 13,559 |
|
Travel and entertainment |
|
| 15,483 |
|
|
| 33,361 |
|
|
| (17,878 | ) |
Research and Development |
|
| 12,156 |
|
|
| - |
|
|
| 12,156 |
|
Provision for doubtful debts |
|
| 345,596 |
|
|
| - |
|
|
| 345,596 |
|
Depreciation and amortization |
|
| 62,900 |
|
|
| 61,678 |
|
|
| 1,222 |
|
Other |
|
| 30,828 |
|
|
| 25,672 |
|
|
| (5,156 | ) |
|
| $ | 568,964 |
|
| $ | 214,650 |
|
| $ | 354,314 |
|
Table of Contents |
Nine Month Period Ended October 31, 2016 ComparedConsulting fees were decreased by $13,704, or 30.8%, from $44,505 in Comparable Quarter to Nine Month Period Ended October 31, 2015$30,801 in Q3, owing to the engagement of external consultants to improve the Company’s operating activities in the Comparable Quarter.
Our net losssalary and payroll expenses were increased by $8,207, or 16.9%, to $56,887 in Q3, as compared to $48,680 in the Comparable Quarter. We anticipate that salary and payroll expenses will continue to rise in future periods as it becomes necessary to increase our staff in order to enhance our management quality for the nine month period ended October 31, 2016 was $52,548 comparedlisting requirement and to a net loss of $15,493 for the nine month period ended October 31, 2015. During the nine-month periods ended October 31, 2016 and 2015, we have not generated any revenue.increase our production activities.
DuringProfessional fees were increased by $13,559, or 1798.3%, from $754 in Comparable Quarter to $14,313 in Q3. The increase of professional fees was due to the nine month period ended October 31, 2016,engagement of more independent professionals such as international lawyers and accountants.
Travel and entertainment expenses were decreased by $17,878, or 53.6%, from $33,361 in Comparable Quarter to $15,483 in Q3. The decrease of travel and entertainment expenses was due to the reduction of project-based travelling activities.
Research and Development expenses were increased to $12,156 in Q3 from $Nil in Comparable Quarter.
Provision for doubtful debts were increased to $345,596 in Q3 from $Nil in Comparable Quarter. The increase was due to the doubtful allowance to the accounts receivable of one major customer provided in Q3. The Company is taking all possible action to collect the overdue receivable in the coming quarter.
Depreciation and amortization expenses were increased by $1,222, or 2.0%, from $61,678 in Comparable Quarter to $62,900 in Q3.
Other expenses include items such as office expenses, software related costs, telephone and a variety of other miscellaneous expenses. None of these expenses alone changed significantly, as the difference was $5,156, slightly increase from $25,672 in Comparable Quarter to $30,828 in Q3.
We anticipate that we incurredwill incur higher general and administrative expenses as a public company. We expect that our professional fees, cost of $ 52,548 compared to $15,493 incurred for the nine month period ended October 31, 2015. Generaltransfer agent, investor relations costs and administrative fee expenses incurred during the nine month periods ended October 31, 2016 and 2015 were generallyother stock related to corporate overhead, financial and administrative contracted services.costs will increase.
The weighted average number of shares outstanding was 60,790,000 for the nine month periods ended October 31, 2016 and 2015.
Three Month Period Ended October 31, 2016 Compared to Three Month Period Ended October 31, 2015
Our net loss for the three month period ended October 31, 2016 was $ 35,593 compared to a net loss of $5,918 for the three month period ended October 31, 2015. During the three-month periods ended October 31, 2016 and 2015, we have not generated any revenue.
During the three month period ended October 31, 2016, we incurredWe also anticipate that selling, general and administrative expenses will concurrently increase with our increased activity in the future but will not increase in the same proportion to that of $35,593 comparedrevenue.
Our loss from operations was increased by $394,579 or 190.61%, to $5,918 incurred fornegative $601,590 in Q3, from $207,011 in Comparable Quarter.
Non-operating income (expenses) was decreased by $77,765, or 102.8%, to negative $2,088 in Q3, from $75,677 in Comparable Quarter, of which mainly due to the three month period ended October 31, 2015. General and administrative fee expenses incurred during the three month periods ended October 31, 2016 and 2015 were generally related to corporate overhead, financial and administrative contracted services.decrease of other income in Q3.
The weighted average number of shares outstandingnet loss attributed to the Company was 60,790,000 for the period ended October 31, 2015 and 2014.
Liquidity and Capital Resources
Nine Month Period Ended October 31, 2016
As of October 31, 2016, our total assets were $0expanded by $472,344, or 359.7% to negative $603,678 in Q3, as compared to $0negative $131,334 in total assets at January 31, 2016. As of October 31, 2016, our current liabilities were $ 89,583 Stockholders’ deficit was $89,583 as of October 31, 2016 compared to stockholders' deficit of $37,035 as of January 31, 2016. As of October 31, 2016, we had negative working capital of $89,583.Comparable Quarter.
Table of Contents |
Cash FlowsResult of Operations for the nine months ended September 30, 2017 and 2016
Revenue was decreased by $1,111,023, or 90.2% from Operating Activities$1,232,111 in the Comparable Period to $121,088 in the Nine Months of FY2017. The decrease in revenue during the Nine Months of FY2017 as compared to the Comparable Period was the result of the Company’s key customer has not placed an order for 2017. Moreover, this customer has not fully settled outstanding invoices for prior sales and the Company has decided to stop selling products to this customer on credit. In order to diversify the risk, our Company has conducted various field trials in order to promote and increase the sales in those major rice-producing provinces in China including Guangxi, Heilongjiang, and Jiangxi.
Cost of sales was decreased by $866,347, or 92.1% from $940,962 in the Comparable Period to $74,615 in the Nine Months of FY2017. The decrease was due to the decrease in production corresponding with the decrease in the sales revenue. In terms of percentage of revenue, cost of sales was 61.6% in the Nine Months of FY2017 as compared to 76.4% in the Comparable Period. The decrease was due to the significant decrease in certain variable costs as the production level dropped.
Gross profit was decreased by $244,676, or 84.0% from $291,149 in the Comparable Period to $46,473 in the Nine Months of FY2017. The decrease reflected the correlation in reduction of revenue. In terms of percentage of revenue, the gross profit percentage was increased to 38.4% for the Nine Months of FY2017 as compared to 23.6% for the Comparable Period. The decrease was primarily due to the significant drop in the sales revenue
Selling expenses were decreased by $12,633, or 19.7%, to $51,615 in the Nine Months of FY2017 from $64,248 in the Comparable Period. In terms of percentage of revenue, the rates were 42.6% in the Nine Months of FY2017 compared to 5.2% in the Comparable Period. The decrease is primarily due to the decrease of testing expenses and shipping and transportation expenses which were correlated to the decrease in sales.
General and administrative expenses were increased by $264,534, or 34.0% to $1,041,981 in the Nine Months of FY2017 from $777,447 in the Comparable Period. The increase is primarily due to the provision for doubtful debts of $345,596 in the period. Excluding this factor, there was a decrease of $81,062 compared to the Comparable Period.
The following is a summary of general and administrative expenses for the nine months ended September 30, 2017, and 2016.
|
| Sept 30, 2017 |
|
| Sept 30, 2016 |
|
| Difference |
| |||
|
| Unaudited |
|
| Unaudited |
|
|
|
| |||
Consulting fees |
| $ | 99,091 |
|
| $ | 212,822 |
|
| $ | (113,731 | ) |
Salary and payroll expenses |
|
| 158,872 |
|
|
| 158,591 |
|
|
| 281 |
|
Professional fees |
|
| 59,764 |
|
|
| 38,448 |
|
|
| 21,316 |
|
Travel and entertainment |
|
| 78,724 |
|
|
| 113,722 |
|
|
| (34,998 | ) |
Research and Development |
|
| 34,607 |
|
|
| - |
|
|
| 34,607 |
|
Provision for doubtful debts |
|
| 345,596 |
|
|
| - |
|
|
| 345,596 |
|
Depreciation and amortization |
|
| 175,280 |
|
|
| 162,599 |
|
|
| 12,681 |
|
Other |
|
| 90,047 |
|
|
| 91,265 |
|
|
| (1,218 | ) |
|
| $ | 1,041,981 |
|
| $ | 777,447 |
|
| $ | 264,534 |
|
Consulting fees were decreased by $113,731, or 53.4%, to $99,091 in the Nine Months of FY2017, from $212,822 in Comparable Period, owing to the engagement of external consultants to improve the Company’s operating activities in the Comparable Period.
Our salary and payroll expenses were increased slightly to $158,872 in the Nine Months of FY2017, as compared to $158,591 in the Comparable Period. We anticipate that salary and payroll expenses will continue to rise in future periods as it becomes necessary to increase our staff in order to enhance our management quality for the listing requirement and to increase our production activities.
Professional fees were increased by $21,316, or 55.4%, from $38,448 in Comparable Period to $59,764 in the Nine Months of FY2017. The increase of professional fees was due to the engagement of more independent professionals such as international lawyers and accountants.
Travel and entertainment expenses were decreased by $34,998, or 30.8%, from $113,722 in Comparable Period to $78,724 in Nine Months of FY2017. The decrease of travel and entertainment expenses is primarily due to the reduction of project-based travelling activities.
Research and Development expenses were increased to $34,607 in the Nine Months of FY2017 from $Nil in the Comparable Period.
28 |
Table of Contents |
Provision for doubtful debts were increased to $345,596 in the Nine Months of FY2017 from $Nil in Comparable Period. The increase was due to the doubtful allowance to the accounts receivable of one major customer provided in the period. The Company is taking all possible action to collect the overdue receivable in the coming quarter.
Depreciation and amortization expenses were increased by $12,681, or 7.8%, from $162,599 in Comparable Period to $175,280 in the Nine Months of FY2017.
Other expenses include items such as office expenses, software related costs, telephone and a variety of other miscellaneous expenses. None of these expenses alone changed significantly as the difference was $1,218, or 1.3%, a minor reduction from $91,265 in Comparable Period to $90,047 in the Nine Months of FY2017.
We anticipate that we will incur higher general and administrative expenses as a public company. We expect that our professional fees, cost of transfer agent, investor relations costs and other stock related costs will increase.
We also anticipate that selling, general and administrative expenses will concurrently increase with our increased activity in the future but will not increase in the same proportion to that of revenue.
Our loss from operations was expanded by $496,577 or 90.2%, to negative $1,047,123 in the Nine Months of FY2017, from negative $550,546 in Comparable Period.
Non-operating income (expenses) decreased $66,435, or 107.5% to negative $4,627 in the Nine Months of FY2017, from $61,808 in Comparable Period, of which mainly due to the other income decreased $76,734, or 98.4% from $77,999 in Comparable Period to $1,265 in the Nine Months of FY2017.
The net loss attributed to the Company further expanded by $563,012, or 115.2% to negative $1,051,750 in the First Half Year of FY2017, as compare to negative $488,738 in Comparable Period.
29 |
Table of Contents |
Liquidity and Capital Resources
The Company’s liquidity and capital is dependent on whether the Company is capable of generating its revenues and increasing its capital for the development and expansion of its business.
Management plans to support the Company’s operation and its business strategy by raising funds through public and private offerings and relying on officers and directors to perform essential management functions with minimal compensation. If we do not raise all of the money we need from a public offering, we will have not generated positive cash flowsto find alternative sources, such as a private placement of securities, or loans from our officers, directors or others. The loans are likely to be unsecured, non-interest bearing and repayable at demand.
Moreover, management has actively taken steps to revise its operating activities. Forand financial needs. Management believes that the Company’s current and available capital resources will allow it to continue its operations throughout this fiscal year.
Working capital
At September 30, 2017, we had a working capital deficit of $8,435,775, as compared to a working capital deficit of $7,333,603 at December 31, 2016. Of the working capital deficit at September 30, 2017, $9,189,816 was amount due to related parties and shareholder. Excluding the amounts due to related parties and shareholder, we would have had a working capital surplus of $754,041 at September 30, 2017. As comparison, the working capital deficit at December 31, 2016, $10,362,992 was amount due to related parties and holding company and $1,814,133 was due from related parties. Excluding the amounts due to/from related parties and holding company, we would have had a working capital surplus of $1,215,256 at December 31, 2016. The amounts due to related parties and shareholder are unsecured, interest free and repayable on demand.
The Company is working with the related parties and expects to have the amounts be offset or settled on or before December 31, 2017.
Operating activities
During the nine month periodmonths ended October 31,September 30, 2017, operating activities used cash of $284,013, and for the comparable nine months ended September 30, 2016, netoperating activities used cash flows usedin operations of $727,848. The use of cash in operating activities for the nine months ended September 30, 2017 was $47,601. Netmainly derived from a net loss of $1,051,750 with a non-cash item of $197,396 ($179,474 plus $17,922) in depreciation and amortization, and $345,596 in provision of doubtful debt; moreover, there was an increase of $31,035 in inventories; an increase of $255,178 in other receivables; a decrease of $40,447 in accrued expenses, which were offset by a net decrease of $562,981 ($610,830 minus $47,849) in amount due from/to related parties. As comparison, the use of cash flows used in operating activities was $9,125 for the comparable nine month periodmonths ended October 31, 2015.September 30, 2016 was mainly derived from a net loss of $448,738 with a non-cash item of $209,093 in depreciation and amortization; moreover, there was an increase of $829,810 in account receivables; an increase of $856,595 in other receivables; a decrease of $81,963 in advances from customer; a decrease of $93,907 in other payables; which were offset by a decrease of $361,584 in inventories; and an increase of $50,660 in accounts payable; and a net increase of $1,009,562 ($1,421,499 minus $411,937) in amount due to/from related parties.
Cash Flows from Investing Activities
ForDuring the nine month periodmonths ended October 31,September 30, 2017, investing activities used $1,502 of cash; and for comparable nine months ended September 30, 2016, investing activities used $1,450 of cash. The slight increase in use of cash was due to the decrease in investment on purchases of property, plant and 2015, the Company has not generated any cash flows from investing activities.equipment.
Cash Flows from Financing ActivitiesActivities:
Since inception we have financed our operations primarily from either advances from directors, officers, the issuance of equity, or loans from related parties. ForDuring the nine month periodmonths ended October 31,September 30, 2017, financing activities used $173,600 of cash; and for comparable nine months ended September 30, 2016, netfinancing activities provided $517,606 of cash. The change of cash providedused by financing activities consistedwas derived from the repayment of $47,601 loaned from related parties,amounts due to our shareholder.
As at September 30, 2017, net cash and cash equivalents balance was $59,532 as compared to $8,950 in net cashbalance $518,849 as at December 31, 2016.
As of September 30, 2017, stockholder’s equity was negative $4,458,623, compared to a negative equity of $3,331,168 at December 31, 2016.
In the current operation, the source of fund was provided during the same period from the previous year which consistedby loans from affiliated parties.directors and shareholders. In the event the directors and shareholders do not continue to support the operation, the Company could be short of funds and may not be able to operate any longer.
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Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds, loans from affiliatedthird parties, other debt facilities, or further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of operating equipment; (ii) developmental expenses associated with a start-upgrowing business; and (iii)(ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to the shareholdings of our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The independent auditors' report accompanying our JanuaryDecember 31, 2016 audited financial statements filed in Form 8-K and 8-K./A to US SEC on May 12, 2017 and August 3, 2017 contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No report required.Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted by an officer under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2016.September 30, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the nine monthmonths period ended October 31, 2016September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ManagementSubsequent to the period ended on September 30, 2017, Yao Gui Mu (“the Plaintiff”), former operation manager of Shanxi Green Biotechnology Industry Company (“the Defendant”) Limited, brought a lawsuit against the Company in the The District People’s Court of Jin Zhong City, Yu Ci District on November 20, 2017. The subject dispute of the lawsuit concerns an unsettled current account balance of $135,239 (RMB900,000) which was claimed to be a loan advanced to the Company by the Plaintiff. The Company’s PRC lawyer had prepared the Statement of Defense on November 23, 2017 and submitted to The District People’s Court of Jin Zhong City, Yu Ci District for defense. A court hearing was held on December 5, 2017, and pursuant to the latest opinion from the Company’s PRC lawyer, no provisions have been made for any probable and material loss as a result of the lawsuit. The final judgment of the lawsuit will be handed down within three months’ time by early February 2018.
Besides the disclosure stated above, management is not aware of any other legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
Not applicable to a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSMINESAFETY DISCLOUSURES
No report required.Not applicable.
Through December 16, 2016, Zhen Hui Certified Public Accountants, with offices located in Hong Kong (“Zhen Hui”) was the independent registered public accounting firm of Green Vision Biotechnology Corp. (previously known as Vibe Wireless Corp.) (the "Company"), for a limited timeframe. On December 16, 2016, the Company notified Zhen Hui that it was dismissing Zhen Hui as the Company’s independent registered public accounting firm. The Company’s Board of Directors approved this action.No report required.
Zhen Hui, independent registered public accounting firm from October 7, 2016 to December 16, 2016, as such did not conduct any audit or review of the Company’s financial statement and therefore never issued an audit report.
During the Company's fiscal years ended January 31, 2016 and 2015 and through December 16, 2016, there were no disagreements (as defined in item 304 of Regulation S-K) with Zhen Hui on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Zhen Hui, would have caused it to make reference to the subject matter of the disagreements in connection with their report.
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The Company furnished Zhen Hui with a copy of this disclosure on December 16, 2016, providing Zhen Hui with the opportunity to furnish the Company with a letter addressed to the Commission stating whether they agree with the statements made by the Company herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which they do not agree. As of the filing of this report, the Company has not received a copy of Zhen Hui letter addressed to the Commission whether they agree with the statements made herein. Upon receipt thereof, the Company will file a copy of such letter with the Securities and Exchange Commission.
On December 16 2016, the Company engaged LBB & Associates Ltd., LLP (“LBB”) as the Company's independent accountant to audit the Company’s financial statements and to perform reviews of interim financial statements. Prior to October 7, 2016, LBB was the Company’s independent registered public accounting firm other than during the time LBB was the company’s public accounting firm. During the fiscal year ended January 31, 2016, and then through December 16, 2016 neither the Company nor anyone acting on its behalf consulted with LBB regarding (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by LBB on the Company's financial statements; or (ii) any matter that was either the subject of a disagreement with Zhen Hui or a reportable event with respect to Zhen Hui.
Exhibits:Exhibits
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In accordance withPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantCompany has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GREEN VISION BIOTECHNOLOGY CORP. | |||
| By: | /s/ William Ching Wan Lam | |
| William Ching Wan Lam Chief Executive Officer | ||
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Chief Financial Officer |
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